3 Surprising Ways lululemon athletica is Driving Sales Growth Today

lululemon athletica is finding creative ways to sell its yoga-inspired gear and connect with local communities.

Aug 28, 2014 at 5:50PM

lululemon athletica (NASDAQ:LULU) raked in $1.6 billion in net revenue last year, and it accomplished this without an exorbitant marketing budget or fancy analytics software. Unlike rival sports-apparel makers Nike (NYSE:NKE) and Under Armour (NYSE:UA), Lululemon doesn't spend tens of millions on celebrity endorsements or Super Bowl ads. The yoga-gear retailer instead relies on grass-roots marketing and community outreach to sell its products. In addition to generating sales through its traditional retail channel, Lululemon is capturing sales in other more subtle ways today.

Inside lululemon athletica's strategic sales unit
Aside from merchandise sold through its 263 stores, Lulu is driving sales growth through three strategic sales programs: athletic-team sales, wholesale, and its yoga and hard goods program for gyms. While the company doesn't disclose what percentage of revenue comes from these segments, it's nonetheless encouraging to see Lululemon diversifying its sales channels. Here's how it works.

Teamwear

Source: Lululemon Athletica.

Lululemon's athletic-team sales program enables local sports teams to order uniforms or sports gear in bulk. "Through the team sales program, we develop relationships with athletic teams, yoga studios and fitness facilities that are elevating their communities by being a stand for health and fitness," according to the company.

In addition to driving bulk order sales, this retail channel means scores of athletic teams around the country act as unofficial ambassadors for the Lululemon brand. Last year, Lululemon supplied all of the shorts and shirts for the fifth-annual Wall Street Decathlon, as well as uniforms for the 2012 Olympic men's beach volleyball team, according to Bloomberg.

Playing in the little leagues
Having an athletic-team sales division is undoubtedly important for creating brand awareness around Lululemon apparel. However, the company is still light-years behind both Nike and Under Armour when it comes to sales to college and professional athletic teams.

Screen Shot

Source: Nike. 

Nike dominates the college football scene, outfitting 46 of the 65 power conference schools this season. Meanwhile, Under Armour comes in with 12% of the college football market, or eight of the 65 power conference schools, according to Louisville Sports. Nike is also the top dog when it comes to the NFL. In fact, a reported $1.1 billion deal means Nike will be the sole uniform manufacturer for the National Football League through 2016.

Given the tough competition from Nike and Under Armour in the athletic-teams space, it is a good thing that Lululemon has two other strategic sales channels in play.

Wholesale, yoga, and hard goods
Lululemon fuels sales within its wholesale program through partnerships that put its products into gyms, fitness centers, and yoga studios in various markets. Lululemon today is working with a limited number of partners in Canada, the U.S., Australia, New Zealand, Hong Kong, and the U.K., according to the company. Through these strategic partnerships, Lululemon gets personal trainers and yoga instructors from leading fitness facilities around the world to wear and promote its products.

Hardgoods

Source: lululemon athletica.

Similarly, Lululemon provides local yoga studios in various markets with lulu-branded equipment, including yoga blocks and mats. Many of these studios even sell Lululemon gear to their members. Lululemon wouldn't say what it charges for these supplies, but it is probably similar to the company's arrangement with so-called brand ambassadors.

As of March, Lululemon had roughly 900 brand ambassadors in North America alone. These are fitness leaders including Olympians, gym owners, fitness coaches, and yoga instructors who teach classes and train exclusively in Lululemon gear. In return, they get 15% off all Lulu merchandise.

Foolish takeaway
These strategic sales channels do much more than boost sales for Lululemon. They create throngs of loyal customers and turn sports aficionados into Lulu fans. Sure, Lululemon doesn't come close to Nike's dominance in the professional sports arena, but it may not need to. The company is finding new life in so-called "athleisure wear" these days, and has innovative products rushing to market at an impressive pace. This, together with Lulu's three under-the-radar sales channels, should drive growth for the company in the quarters ahead. Shares of Lululemon are down more than 40% so far this year, but the company finally looks positioned for a turnaround.

Lululemon doesn't pay a dividend, but these top stocks do...
The smartest investors know that dividend stocks simply crush their nondividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Tamara Rutter owns shares of Lululemon Athletica. The Motley Fool recommends Lululemon Athletica, Nike, and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers